Why digital transformation is the key to healthier (and more numerous) business relationships

Why digital transformation is the key to healthier (and more numerous) business relationships

Small and medium-sized B2B companies are the backbone of the European economy – but many are struggling to digitize. Some question the (often considerable) expense, others state that it’s just not necessary for their business or fear the resistances related to new habits and competencies that new technologies require. ‘Why should we go to the trouble of digitisation? What will it add?’ many ask.

It’s an understandable position – and we all know that people don’t like change in the workplace, so if a business has prospered for years and continues to do well without a fancy new CRM system or automated manufacturing, what’s the point?

This is one of the questions I set out to answer with my colleague Catherine Pardo and recently published, as the paper ‘The Impact of digital technology on relationships in a business network’, published in Industrial Marketing Management Journal.

We examined the impact of digitisation – specifically the adoption of internet-connected digital technologies and applications by companies on B2B exchanges. While B2C business has been studied extensively in this context, B2B companies have received far less attention.

What is clear is that digital technologies are gradually changing B2B companies – but what is less apparent is to what extent this is happening and how this transformation is affecting the businesses and their interactions with their customers, suppliers and other stakeholders. Specifically, we wanted to look at how digital technology is changing relationships within a business network – and how this could be of value to businesses themselves.

So – we conducted several meetings and interviews with digital marketing managers at B2B companies from five different industries and found that, despite the upheaval and expense, investing in digital technologies and transformation is a no-brainer.

One key point to communicate is that, although digital transformation can be complicated, it rarely results in a fundamental change in business practice. Biomérieux, a company with aim of improving public health and one of the companies we spoke to, doesn’t change its sales activities through digitisation, but rather uses digital devices to complete B2B transactions, allowing for a more efficient transaction with its customer. The Coca-Cola Entreprise, doesn’t change its business of bottling syrups, but thanks to a digital CRM platform is now able to continuously monitor its clients and improve the quality of its relationships. Volvo uses GPRS tracking of its machines so that the company can be proactive about machine maintenance and cut servicing costs becoming active player in a larger ecosystems. Based on these examples digitisation may impact the level of activities, resources or relationships with other actors.

So – having done this research, what is the advice for companies?

Firstly, managers should look at digital transformation as a ‘value network’ issue, rather than a traditional ‘value chain’ one. Digitization blurs the boundaries between a company and its customers and has the potential to promote new alliances and collaboration with external actors. In short, it can create business relationships that otherwise would not exist, nurtures innovations that would otherwise not occur and, in doing so, contributes significantly towards the development of a more dynamic workplace. For these reasons alone sceptical managers should reconsider how important digitization could be to them – the potential upsides are considerable.

Secondly, it became clear to us that in B2B environments, there is often a problem explaining to employees why digitization is necessary – or even what it is at all… By linking digitization to familiar concepts such as relationships, value, activities and resources, managers can translate digital transformation into something that is more widely understood – and accepted – throughout the workforce.

And finally, managers should use the possibilities presented by digital transformation to ‘imagine’ more; Imagine how digitizing could allow their company to align more closely with its customers and suppliers, imagine how this could allow greater efficiencies for both parties, imagine how existing resources could be deployed differently to realise new business activities, and, ultimately imagine how new relationships forged through digitalisation could lead to previously invisible opportunities.

Digital transformation might sound scary – but overcome your fear and it could set your business free!

I am Professor of Digital Marketing, Director of the AIM Research Center on Artificial Intelligence in Value Creation and Co-Director of the MSc in Digital Marketing and Data Science. I am also Adjunct Professor at Bocconi University (Italy). I hold a HDR (Habilitation to Direct Researches) and a Ph.D in Management. My current research examines digital marketing, consumer behavior and new technologies, robotics, AI. I also study social media, privacy and competitive dynamics influencing value creation and capture in digital ecosystems. I published several books (published in US, Italy, Korea), two encyclopedias and articles in leading international journals, and won several Awards.

Professor of marketing business-to-business, I teach to Master in science and executive education participants. My research focuses on B2B marketing and, more generally, how organizations manage their exchanges of products and services, in particular when their customers are “key accounts”. I have published articles in several international reviews such as Industrial Marketing Management, Journal of Business and Industrial Marketing, Journal of Personal Selling and Sales Management, European Journal of Marketing.

By the same authors:

Small and medium-sized B2B companies are the backbone of the European economy – but many are struggling to digitize. Some question the (often considerable) expense, others state that it’s just not necessary for their business or fear the resistances related to new habits and competencies that new technologies require.

Margherita Pagani sheds light on how marketers can create a stronger engagement with consumers on social networks in her recent research, ‘Antecedents of brand love in online network-based communities: A social identity perspective’.

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